Nortel Provides Update on Global Settlement of Shareholder Class Action Litigation

Toronto, Canada (ots/PRNewswire) -

- Definitive Settlement Agreement Signed with Lead Plaintiffs;
Agreement Reached With Canadian Plaintiffs

Nortel(x) (NYSE: NT, TSX: NT) today announced that, as a result of
the continuing discussions in the mediation process with respect to
the previously announced agreement in principle for a proposed
settlement of certain shareholder class action lawsuits with the
lead plaintiffs in two significant class action lawsuits pending in
the Southern District of New York, the Company and the lead
plaintiffs have entered into stipulations and agreements of
settlement in the two actions.

As previously announced, the proposed settlement was conditioned,
among other things, on the resolution of related Canadian
shareholder class actions. Nortel has now also reached agreement
with the plaintiffs in those Canadian actions with respect to the
global settlement as set forth in the stipulations and agreements of
settlement.

These various settlement agreements encompass most pending and
proposed shareholder class actions commenced against the Company and
certain other defendants following the Company's announcement of
revised financial guidance during 2001, and the Company's revisions
of its 2003 financial results and restatement of other prior periods
effected during the first half of 2005.

As previously announced, under the terms of the global settlement,
subject to certain approvals, the Company would make a payment of
US$575 million in cash, issue 628,667,750 of its common shares
(representing approximately 14.5% of its equity), and contribute
one-half of any recovery in the existing litigation by Nortel
against Messrs. Frank Dunn, Douglas Beatty and Michael Gollogly, the
Company's former senior officers who were terminated for cause in
April 2004. The cash amount bears interest as of March 23, 2006 at a
prescribed rate and was paid into escrow as of June 1, 2006 pending
satisfactory completion of all conditions to the settlement.
Further, previously announced settlement terms with respect to
insurance and corporate governance related matters remain unchanged.
The settlement contains no admission of wrongdoing by the Company or
any of the other defendants.

The settlement remains conditioned, among other things, on receipt
of all required court, securities regulatory and stock exchange
approvals. Although settlement agreements have been entered into, at
this time, there can be no assurance that all conditions to such
agreements will be satisfied.

The Company will continue to cooperate fully with the U.S. and
Canadian securities regulators and law enforcement authorities in
their ongoing investigations relating to the Company's accounting
restatements, and the settlement does not relate to these ongoing
investigations. The settlement also does not encompass the
previously disclosed related ERISA action, the previously disclosed
pending application in Canada for leave to commence a derivative
action against certain current and former officers and directors of
Nortel, and the previously reported proposed Ontario shareholder
class action against Nortel and certain current and former directors
and certain former officers in respect of the payment of cash
bonuses to executives, officers and employees in 2003 and 2004 under
the Nortel Networks Return to Profitability bonus program.

About Nortel

Nortel is a recognized leader in delivering communications
capabilities that enhance the human experience, ignite and power
global commerce, and secure and protect the world's most critical
information. Our next- generation technologies, for both service
providers and enterprises, span access and core networks, support
multimedia and business-critical applications, and help eliminate
today's barriers to efficiency, speed and performance by simplifying
networks and connecting people with information. Nortel does
business in more than 150 countries. For more information, visit
Nortel on the Web at www.nortel.com. For the latest Nortel news,
visit www.nortel.com/news.

Certain statements in this press release may contain words such as
" could", "expects", "may", "anticipates", "believes", "intends",
"estimates ", "plans", "envisions", "seeks" and other similar
language and are considered forward-looking statements or
information under applicable securities legislation. These
statements are based on Nortel's current expectations, estimates,
forecasts and projections about the operating environment, economies
and markets in which Nortel operates. Further, actual results or
events could differ materially from those contemplated in
forward-looking statements as a result of the following (i) risks and
uncertainties relating to Nortel's restatements and related matters
including: Nortel's most recent restatement and two previous
restatements of its financial statements and related events; the
negative impact on Nortel and NNL of their most recent restatement
and delay in filing their financial statements and related periodic
reports; legal judgments, fines, penalties or settlements, or any
substantial regulatory fines or other penalties or sanctions,
related to the ongoing regulatory and criminal investigations of
Nortel in the U.S. and Canada; any significant pending civil
litigation actions not encompassed by Nortel's proposed class action
settlement; any substantial cash payment and/or significant dilution
of Nortel's existing equity positions resulting from the
finalization and approval of its proposed class action settlement,
or if such proposed class action settlement is not finalized, any
larger settlements or awards of damages in respect of such class
actions; any unsuccessful remediation of Nortel's material
weaknesses in internal control over financial reporting resulting in
an inability to report Nortel's results of operations and financial
condition accurately and in a timely manner; the time required to
implement Nortel's remedial measures; Nortel's inability to access,
in its current form, its shelf registration filed with the United
States Securities and Exchange Commission (SEC), and Nortel's below
investment grade credit rating and any further adverse effect on its
credit rating due to Nortel's restatements of its financial
statements; any adverse affect on Nortel's business and market price
of its publicly traded securities arising from continuing negative
publicity related to Nortel's restatements ; Nortel's potential
inability to attract or retain the personnel necessary to achieve
its business objectives; any breach by Nortel of the continued
listing requirements of the NYSE or TSX causing the NYSE and/or the
TSX to commence suspension or delisting procedures; (ii) risks and
uncertainties relating to Nortel's business including: yearly and
quarterly fluctuations of Nortel's operating results; reduced demand
and pricing pressures for its products due to global economic
conditions, significant competition, competitive pricing practice,
cautious capital spending by customers, increased industry
consolidation, rapidly changing technologies, evolving industry
standards, frequent new product introductions and short product life
cycles, and other trends and industry characteristics affecting the
telecommunications industry; any material and adverse affects on
Nortel's performance if its expectations regarding market demand for
particular products prove to be wrong or because of certain barriers
in its efforts to expand internationally; any reduction in Nortel's
operating results and any related volatility in the market price of
its publicly traded securities arising from any decline in its gross
margin, or fluctuations in foreign currency exchange rates; any
negative developments associated with Nortel's supply contract and
contract manufacturing agreements including as a result of using a
sole supplier for key optical networking solutions components, and
any defects or errors in Nortel's current or planned products; any
negative impact to Nortel of its failure to achieve its business
transformation objectives; additional valuation allowances for all or
a portion of its deferred tax assets; Nortel's failure to protect
its intellectual property rights, or any adverse judgments or
settlements arising out of disputes regarding intellectual property;
changes in regulation of the Internet and/or other aspects of the
industry; Nortel's failure to successfully operate or integrate its
strategic acquisitions, or failure to consummate or succeed with its
strategic alliances; any negative effect of Nortel's failure to
evolve adequately its financial and managerial control and reporting
systems and processes, manage and grow its business, or create an
effective risk management strategy; and (iii) risks and
uncertainties relating to Nortel's liquidity, financing arrangements
and capital including: the impact of Nortel's most recent restatement
and two previous restatements of its financial statements; any
inability of Nortel to manage cash flow fluctuations to fund working
capital requirements or achieve its business objectives in a timely
manner or obtain additional sources of funding; high levels of debt,
limitations on Nortel capitalizing on business opportunities because
of credit facility covenants, or on obtaining additional secured
debt pursuant to the provisions of indentures governing certain of
Nortel's public debt issues and the provisions of its credit
facilities; any increase of restricted cash requirements for Nortel
if it is unable to secure alternative support for obligations
arising from certain normal course business activities, or any
inability of Nortel's subsidiaries to provide it with sufficient
funding; any negative effect to Nortel of the need to make larger
defined benefit plans contributions in the future or exposure to
customer credit risks or inability of customers to fulfill payment
obligations under customer financing arrangements; any negative
impact on Nortel's ability to make future acquisitions, raise
capital, issue debt and retain employees arising from stock price
volatility and further declines in the market price of Nortel's
publicly traded securities, or any future share consolidation
resulting in a lower total market capitalization or adverse effect
on the liquidity of Nortel's common shares. For additional
information with respect to certain of these and other factors, see
Nortel's Annual Report on Form 10- K/A, Quarterly Report on Form 10-Q
and other securities filings with the SEC. Unless otherwise required
by applicable securities laws, Nortel disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.

(x)Nortel, the Nortel logo and the Globemark are trademarks of
Nortel Networks.

ots Originaltext: Nortel Networks
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For further information: Media - Patricia Vernon, +1-(905)-863-1035,
patricve@nortel.com; Investors - +1-(888)-901-7286,
+1-(905)-863-6049,
investor@nortel.com